Briefing: Toyota to source batteries from China’s CATL and BYD

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Toyota teams with China’s CATL and BYD to power electric ambitions – Nikkei Asian Review

What happened: In a move to diversify its supply of critical components, Toyota said on Friday that it will buy batteries from two Chinese battery manufacturers: Contemporary Amperex Technology (CATL) and BYD. The Japanese automaker said in the announcement that it is the first time it has sourced critical components from Chinese manufacturers. Toyota also expanded its supplier roster in Japan by making deals with Toshiba and GS Yuasa in addition to its long-term partnership with Panasonic. The company seeks to support its sales goal of at least 5.5 million electrified vehicles to comprise more than half of total sales by 2025, moving what had been a 2030 goal up five years. The company sold around 1.6 million electrified vehicles in 2018.

Why it’s important: Despite its youth, eight-year-old Fujian-based CATL surpassed Panasonic in sales as the world’s largest battery supplier in 2017. It secured a battery supply contract for about 1 million electric vehicles from Honda in February. Toyota is shifting from a more conservative strategy in all-electric cars with the majority of its EV sales reportedly coming from gasoline hybrids. It is accelerating its electrification timeline to capture sales subsidies offered by the Chinese government, which excludes hybrids. CATL and BYD are expected to supply lithium-ion batteries for Toyota’s electric vehicles beginning next year in China, the world’s largest EV market in 2018, according to analysis from auto data consultancy EV Volumes.